Calculate the average values for the measures

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Reference no: EM131929736

Question: Lee Appliances knows that weekly demand for high-end microwaves is normally distributed, with a mean of 25 units and a standard deviation of 7 units. (In your model use integers for all demands.) Lee replenishes its inventory by ordering 300 units from the distributor whenever its current inventory reaches 70 units. The lead time (in weeks) to receive an order from the distributor follows the distribution shown in the following table:

The cost to hold 1 unit in inventory for 1 week is $20. The cost to place an order with the factory is $300. Stockout costs are estimated at $100 per unit. The initial inventory level is 140 units.

(a) Simulate 52 weeks of operation to calculate the total semiannual cost and the percentage of stockouts for the period. Replicate these calculations N times each to calculate the average values for these measures.

(b) Lee would like to evaluate the economics of ordering 250, 275, 300, 325, and 350 units, with a reorder point of 70 units. Based on the average total semiannual cost, which order quantity would you recommend?

(c) Lee would like to evaluate the economics of ordering 300 units, with reorder points of 60, 70, 80, 90, and 100 tires. Based on the average total semiannual cost, which reorder point would you recommend?

Reference no: EM131929736

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